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Kuwait plans steep rise in electricity charges for heavy users

Proposed government bill says consumers could pay as much as 7.5 times more than current rate

By Staff writer

Thu 31 Mar 2016 02:11 PM

Kuwait’s government has submitted a draft law that could see bills for heavy consumers of electricity rise by as much as seven and a half times.

The Kuwait Times reported that the law had been submitted to the parliament’s Financial and Economic Affairs Committee after being approved by the country’s cabinet on Monday.

The current cost of electricity in Kuwait is 2 fils per kilowatt-hour (7 US cents). The draft bill proposes raising prices from between 5 fils and 15 fils, for both villas and apartments, depending on the level of consumption.

The report quoted a Kuwaiti member of parliament (MP) as saying that the committee would seek to reduce the government’s proposed charges, including a bid to keep the current rate of 2 fils unchanged for households that consume little electricity.

The MP said that the committee would be held on 6 May to consider the bill.

The proposed move is just the latest step in a raft of economic reforms, which include removing subsidies on petrol and utilities, as well as taxes and fees, which are being considered by each of the GCC countries as the low oil price puts pressure on public finances.

Earlier this month, Kuwait's cabinet has approved economic reforms including the introduction of a 10 percent tax on corporate profits to narrow the country’s budget deficit.

Officials have previously said they are considering cuts to subsidies, but the issue is politically sensitive because it could directly affect the living standards of Kuwaitis. The subsidies cost the government billions of dollars annually.

The finance ministry projected in January that because of low oil prices, the government would run a deficit of 12.2 billion dinars ($40.7 billion) in the fiscal year starting on April 1, nearly 50 percent higher than the deficit estimated for the current year, after government contributions to the sovereign wealth fund.